Why Keir Starmer's fate depends on cutting our energy bills
UK industry pays nearly four times as much for electricity as companies in the US do and far more than rivals in Germany and other European countries
If the cost-of-living crisis feels like it’s never really gone away, the reason is simple. According to a House of Commons Library briefing, typical household energy bills, despite some falls, are still 43 per cent above the level at the start of 2022, before Putin’s invasion of Ukraine sent oil and gas prices soaring.
That crisis was beyond the UK’s control, but we were hit particularly hard with domestic electricity prices in the last six months of 2024 higher than those in all but three European Union countries.
Meanwhile, according to the International Energy Agency, UK industrial electricity prices in 2023 were 46 per cent higher than the average of its 32 members. Our firms paid an average of £258 per megawatt-hour, compared to £218 in Italy, £177 in Germany and just £65 in the US.
Holy Grail
So reducing energy bills must be a top priority for government, given the dramatic effect this would have on people’s quality of life and the economy. It might even be the Holy Grail the country needs to find to restore economic growth to good health after years of stagnation.
One suggested way to do this was zonal pricing of electricity, which supporters claimed would make the National Grid more efficient and lead to lower prices – particularly in Scotland. However, amid concerns it might also push up bills for those in south-east England and discourage investors, the government has ruled this out, with Energy Secretary Ed Miliband concluding “a reformed system of national pricing is the best way to deliver an electricity system that is fairer, more affordable, and more secure”.
At the heart of Labour’s plan is a massive increase in the amount of renewable energy which, according to government and industry figures, is a cheaper source of electricity than the gas-fired power stations that almost always set the price.
It’s fair to say there is a lot riding on the success or failure of this approach. Succeed, and good times may return. Fail, and the economy will continue to falter, the goal of net zero will be tarnished, and Labour may find themselves ejected from power at the electorate’s first opportunity.
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